The news was confirmed to the BBC by the Iraqi deputy foreign minister.
Iraqi TV said the execution took place just before 0600 local time (0300GMT). A representative of the prime minister and a Sunni Muslim cleric were present.
Two co-defendants, Saddam Hussein's half-brother and a former chief judge, are to be executed at a later date.
All three were sentenced to death by an Iraqi court on 5 November after a year-long trial over the 1982 killings of 148 Shias in the town of Dujail.
A small group of Iraqis witnessed the execution at an Iraqi compound known by the Americans as Camp Justice, a secure facility in the northern Baghdad suburb of Khadimeya.
They watched as a judge read out the sentence to Saddam Hussein. The former Iraqi leader was carrying a copy of the Koran and asked for it to be given to a friend.
The noose was then placed around his neck before the trap door was released. The execution took just a few minutes.
Video footage of the execution is expected to be released as final proof of Saddam Hussein's demise although it is expected to stop short of showing the actual death.
US troops and Iraqi security forces are on high alert for any violent backlash. The US State Department has urged all its embassies to increase security.
'End of a dark period'
News of Saddam Hussein's execution was broadcast on state-run Iraqiya television, as patriotic music and images of national monuments were played out.
| | It is an important milestone on Iraq's course to becoming a democracy that can govern, sustain, and defend itself US President George W Bush |
Saddam Hussein was hanged first, followed by Barzan and then Bandar, it announced. However, an Iraqi national security advisor later said only Saddam Hussein was hanged.
"We wanted him to be executed on a special day," Mouwafak al-Rubaie told Iraqiya, adding that Saddam Hussein "totally surrendered" and did not resist.
Saddam Hussein's half-brother Barzan al-Tikriti and Iraq's former chief judge Awad Hamed al-Bandar are to be executed some time after the Eid festival ends next week, he said.
Other Arab TV stations aired live footage of the sunrise over Baghdad's Firdous Square, where US Marines pulled down a statue of Saddam Hussein, after he was deposed in April 2003.
The BBC's Peter Greste in Baghdad says Shias have generally welcomed Saddam Hussein's death and hailed the execution as justice for the suffering endured under his leadership.
But Saddam's own Sunni tribesman were angered by his treatment and may well protest once more, our correspondent adds.
'Held to account'
US President George W Bush hailed the execution as "an important milestone" on the road to building an Iraqi democracy, but warned it would not end the deadly violence there.
| | I feel saddened by the death of Saddam, not because he deserved to live but because it is taking place under US occupation of Iraq Nafeesa Zafar, Pakistan |
He said: "It is a testament to the Iraqi people's resolve to move forward after decades of oppression that, despite his terrible crimes against his own people, Saddam Hussein received a fair trial.
"It is an important milestone on Iraq's course to becoming a democracy that can govern, sustain, and defend itself, and be an ally in the War on Terror."
UK Foreign Secretary Margaret Beckett welcomed the fact that Saddam Hussein had been tried by an Iraqi court "for at least some of the appalling crimes he committed" and said "he has now been held to account".
France called on Iraqis to "look towards the future and work towards reconciliation and national unity".
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